Mumbai luxury homes on plot for low-cost housing

Affordable housing remains unaffordable in Mumbai. Realtors blame high land prices; citizens blame a builder-politician nexus; activists and industry watchers cite cases of rules being bent. Who loses? The common man.

Affordable housing remains unaffordable in Mumbai. Realtors blame high land prices; citizens blame a builder-politician nexus; activists and industry watchers cite cases of rules being bent. Who loses? The common man.

Consider this: One of Mumbai's most sought-after addresses, Hiranandani Gardens in Powai, where 6,000-odd families live in a 230-acre complex, had originally been earmarked for thousands of affordable homes. A 1,000-square-foot apartment there would now cost between Rs 1.75 crore and Rs 2.5 crore.

The story goes back to the 1970s when the state government and the Mumbai Metropolitan Region Development Authority (MMRDA) acquired 230 acres from private owners to build affordable housing.

Subsequently, the government returned the land to the landlowners for development. The land was granted benefits under the Urban Land Ceiling Regulation Act. In an effort to create affordable housing stock, the government put a disclaimer: half the houses would be 430 sq ft in size; the rest would be 830 sq ft.

Niranjan Hiranandani was roped in by the landowners, and an agreement was signed in 1986 by the land owners, Hiranandani, and the state government.

As work on the project took off, several PILs were filed stating that the developer had violated the affordable housing clause. The state government asked the MMRDA to conduct an inquiry in October 2007.

'I have not done anything wrong'

Niranjan Hiranandani, the man who heads the Rs 1,600-crore Hiranandani Group, denies any wrongdoing and says the whole thing is a conspiracy hatched by business rivals to harm his company’s image.

He said MMRDA officials had erred in imposing a fine of Rs 1,993.22 crore and that the decision was based on wrong information. "The officials did not take into consideration the MMRDA's own rules while undertaking the inquiry." Under the rules, amalgamation of flats as well as commercial development was permitted, he claimed.

He said he was contesting the state government’s charge that he was guilty of technical violations. "The report points to certain technical violations for which I have been fined. I have contested the issue."

In his inquiry report in December 2008, then MMRDA commissioner Ratnakar Gaikwad said there were violations: only 15% of the flats built were less than 430 square feet in size. Most of the flats were 2,000 to 5,000 square feet. Besides, the MMRDA found commercial complexes had been built against the rules.

In January 2009, the MMRDA recommended a fine based on the prevalent market rates for all flats over the prescribed limit. The fine was pegged at Rs 1,993.22 crore. The MMRDA then sent this report to the State Urban Development Department.

The UDD, after evaluating the report, said in December 2009 that the assumptions made were wrong. It reduced the fine to Rs 86.75 crore. (See box for details)

The developer has refused to pay the reduced fine and the case has gone into arbitration. Retired high court judge Arvind Sawant was appointed arbitrator in April 2010 and the hearings are still on.